Romney Thinks Middle Class Makes Up To $200,000 A Year
By Justin Gardner | Related entries in 2008 Election, Money, Romney, TaxesTo describe the following as clueless is actually an insult to the clueless.
“I do believe we should take action to keep the economy from falling into a recession,” Romney told reporters when asked if a stimulus package was needed. “We do need to forestall the growing credit crisis and the subprime mortgage crisis.”“We need tax stimulus of the nature that will propel growth and at the same time provide capital for our markets given the credit crunch,” Romney said. On the campaign trail, he has urged eliminating taxes on savings for middle income families that earn $200,000 or less.
Do note what he’s saying with this. He’s talking about cutting taxes on savings…which roughly translates into cutting taxes on dividend income. And that would be the money people make off of stocks. So if you cut dividend income, that usually means that people then reinvest more of that money back into the markets.
And when Romney says, “provide capital for our markets given the credit crunch,” what he really means is that because the banks have SO overextended themselves and can’t borrow any more money to save their asses, we should make it easier for investors to put that money back into the system so the banks can, well, overextend themselves again. Because after all, we’d never actually try to REGULATE their behavior or punish their gross negligence. No, that would be anti-business…
By the way, how would he pay for this? Any idea? I’ll take a wild guess and predict that Romney will propose cutting social programs. Because honestly, who needs those?
So at the end of the day, Romney is really talking about a giveaway to the wealthy which would then benefit the super wealthy. That’s all this is. That’s his “stimulus” package.
Folks, this makes absolutely ZERO sense for the people in the middle class who really need a tax break, and it only serves to further the idea that the super wealthy can keep “failing up.” You know, it’s that thing that so many CEOs are doing these days when they leave their companies in tatters, but get an insane severance package which could probably pay for half the jobs that have to be cut out of the payrolls so the company can actually stay afloat.
Please Mitt, go sell class warfare somewhere else.
This entry was posted on Tuesday, January 15th, 2008 and is filed under 2008 Election, Money, Romney, Taxes. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
January 15th, 2008 at 12:43 pm
But they get a tax break too since they make less than 200K, you seem to be implying that they won’t get one.
Fine, but if you want to regulate the institutions who have the financial clout to lend and thus get us out of this mess, instead of reducing interest rates and taxes which would help the banks mitigate more risk in a credit crisis, then you just have to accept a prolonged recession.
If it helps assuage your need to “tax the rich and feed the poor,” then OK but every economist knows that is the opposite direction you need to take if you want to avoid recession.
Who is playing class-warfare here?
January 15th, 2008 at 1:05 pm
Yeah, this post is funny in a sad, pathetic, class-resentment sort of way. A whole lot of families just became “rich” under Justin’s bitter little Marxist theory of the universe. In fact, Romney is probably using the SEC’s definitions of an “accredited investor” under Reg. D as a baseline. The panultimate paragraph just makes no sence at all, what the hell does a CEO’s severance package have to do with the economic merit of cutting capital gains for those under 200K income? Oh, its those mid-level CEO bastards. I’d say this post is a joke, but that insinuates that I get your point, which I don’t — other than families which make a joint income of 195K a year are “rich.” And yes, most of federally subsidized social programs suck. Big surprise.
Oh, how the inner little resentful communist comes out — maybe we should forget about a free market and just let you run things. Afterall, you raised over a 100 bucks for Donklephant. I think your qualified. Free markets, in fact freedom itself, just brings out the bad in people and is certainly not egalitarian. We need to regulated banks so that they can’t loan people money with unworthy credit, increase the size and scope of the welfare state, and redistribute income so that we all make 50K a year.
President Gardner anyone?
January 15th, 2008 at 1:54 pm
Oh boy, where do I begin…
Romney’s tax cut would target a very specific class, that being the investor class. It wouldn’t target everybody. You are correct when saying I would resent that move, even though I belong to the investor class.
If this were a tax cut on wages, I’d be fine with that. Although I think dropping the middle class ceiling to $100K for a married couple would be sensible. Why? Because people who make above that would STILL GET THE TAX CUT ON THEIR FIRST $100K. That’s not class warfare. That’s just fair.
And Dos, the CEOs’ severance packages are more examples of the “fail up” systems we currently have in place, which is what Romney’s idea would continue to support. If you free up more credit, the markets will take it. And as we’ve seen in the past couple decades, the market can pour trillions into really bad ideas. Romney is not introducing any ideas to fix that problem, he’s only seeking to further exacerbate it.
Last point, doesn’t it make sense to lessen the burden on ALL of us instead of a select few?
Sometimes it seems like you really don’t get your own economic philosophy.
January 15th, 2008 at 2:17 pm
Capital gains can also include stuff bequeathed to you, like your parents’ house or an inheritance from an annuity or retirement fund. Lots of people who don’t play the stock market get a benefit from capital gains cuts. Also, more and more people are investing for their own retirement and not relying on social security.
January 15th, 2008 at 2:30 pm
You’re cute.
“If you free up more credit, the markets will take it.” Really. Okay - because Citibank and others are in the business of lossing 24 billion dollars. So you think that lessening the tax burden on investment income is the same as bailing out financial institutions that engaged in subprime lending and are now crunching credit. Ummm…okay. Well, that is an interesting theory. Let’s go with it. Obviously what this subprime distaster calls for is more centralized economic planning and more income redistribution.
“And as we’ve seen in the past couple decades, the market can pour trillions into really bad ideas.” People pour trillions into really bad ideas Justin and they should be free to do so and then they should not be sheltered from the consequences of really bad decisions. On that I think we agree.
But your nexus between cutting capital gains and the credit crunch is idiotically tenuous to say the least. Sure cutting capital gains would stimulate more investment. Is that a bail out? Investment in what? There are a lot of things to invest in Justin. Stocks, bonds, real estate, gold, cow shit.
Your “fail up” rhetoric is just that…rhetoric - without substance and just plain old good-fashioned class warfare. My economic philosophy is not difficult to understand Justin: Centralized planners will always have an information problem in the allocation of resources. You want to say: X amount and up is rich, but the fact is, x amount may be rich in Missouri and very middle class in New York.
My point remains — why don’t you tame down the arrogance it requires to think that you have such a firm grasp on all aspects of the economy (or anyone does) that it should be controlled by you or our elected politicians in Washington D.C. Cut all taxes, across the board and see how well the economy does — fantastic.
Sometimes it seems like you might be the poster-boy for marginalism and intellectual mediocrity. One campaign season of listening to Ron Paul and you’d think Von Mises himself ran this site.
Good day.
January 15th, 2008 at 4:11 pm
I’m in a family of 6, with two of the three kids (myself and my brother) currently attending and paying for college. Added up, my parents probably make around $200,000 a year (before taxes) give or take a couple grand. And even with the college payments and other various expenses, we are still probably upper middle bordering on the upper class.
Now, I definitely lean center-right on taxation issues, but I would prefer that all earners, rich and poor, recieve relatively equal tax breaks in most cases. Even with the crippling tuition payments of my brother and I, my family is doing pretty well. Now I’m sure my parents would love a tax break like the one Romney explains. Who wouldn’t? But why should my family, who is doing well at this point, get a tax break while the lower and lower-middle classes are left out? I feel that they’d need it just as much as my family, if not more.
January 15th, 2008 at 6:06 pm
I think the problem here is that such a tax break does almost nothing for the middle-class.
The middle-class is defined as 75-125% of the median income. In 2006 the median was 48,000 giving us a range of 36,000 - 60,000 for the middle-class (scary isn’t it).
Those folks are not investors. Sure some probably do hold investments in tax favored retirement accounts (where they’d not pay on dividends anyway), but the majority are just getting by day to day. This is to say nothing of the lower-class.
So Romney offers something that will ease the pocketbook of investors that don’t really need it to help take the squeeze of the credit market, which isn’t really good for the middle and lower-class folks anyway (the last thing they need is more high interest credit) and says it’s for their benefit. Sure, IF they had money to invest beyond their Roth IRA (assuming they do even that) they too would catch a break on their investments (which they don’t have…).
I think Justin’s right in that taking it to $200,000 will require cutting god awful gov’t services that are (unfortunately for them) necessary for the lower and lower-middle class.
It equates to tax break for those that don’t need it, while offering it to those that can’t use it, and requiring cuts to programs that the worst of can’t live without.
I’ve never once voted for a democrat, but even I can see this is a bad idea.
January 15th, 2008 at 7:45 pm
Whether or not this kind of proposal helps the middle class depends on the savings rate for those people, doesn’t it? And that figure is low enough to make it meaningless for the people making under $100,000.
January 15th, 2008 at 9:19 pm
Again, I reiterate…
If you have a cut tax for wages under $100,000, that tax cut targets everybody. That’s a fair cut. Romney’s cuts only target the investor class. Now it is true that many employees use their 401(k) plans to invest, but those accounts (and people) would see no tax benefits. However, the speculative investor would, but they make up a very small subset of the American population. It’s nice he’s putting a $200K cap on it, but you’re most likely going to see the people taking advantage of it who make between $50K - $100K a year if they’re single and $100K - $200K. That will capture some middle classers, but not many.
So if you really think I’m engaging in class warfare, well, then maybe I am. Because I don’t think a very small subset of the American population should get a tax break before EVERYBODY does. Something tells me that however argues the opposite side of that argument is on the wrong side of the war.
Also, the reality is that Americans spend more than they save. I appreciate that Mitt’s idea could help people who get hit with higher capital gains taxes from the profits they got from selling real estate, but you only need to be in your home 2 years for those taxes to get lower because any profit will then be considered long term capital gains as opposed to short term. Again, in this case, Romney’s tax cuts would still be of the most benefit for the speculator community.
By the way, thanks to all of the other commenters who backed me up on this one. I think you can tell I’m a friend of sound economic policy, and Romney’s idea is not fiscally sound. Not by a long shot.
January 16th, 2008 at 11:05 am
test…
January 16th, 2008 at 11:38 am
In the name of fairness -
All the quarrels on the topic would cease to exist if certain among us quit trying to penalize those that work hard and achieve to reward those that sponge off the system and demand more.
It’s simple. EVERYONE that pays taxes, regardless of income, should get a tax break.
The vacuous argument that certain people who happen to have more than others should be exempted from a tax cut is totally outrageous and unsound economics.
After all, the despised “rich” are the same people that create jobs and opportunities to make the world go round. Let them decide what they want to do with their money.
The people that should NOT receive a tax cut are the non-payers.
January 16th, 2008 at 2:21 pm
Why is it that all of you so-called “fair tax” supporting republicans think that money earned by hard work should be taxed twice as much as money from investments? I don’t get it. My guess is that you don’t even know what I’m talking about because you only listen to lying corporate whores.
January 16th, 2008 at 5:54 pm
Agreed Elisabetta , now just show me how this amounts to an ACTUAL tax break for anyone making less than six figures.
A “fair tax break” would impact everyone equitably not just those that have the means to take full advantage of it.
And to be fair the majority of the folks making it big on wall street don’t actually create jobs… they leech off the less-connected/informed by gaming the system *waving at you hedge funds* Just remember for every winner on the street there are a lot of losers, and when the biggest winners actually lose, the taxpayers foot the bill with bailouts and inflation fueling interest rates.
January 16th, 2008 at 8:16 pm
Rob points out one of the other facts that Elisabetta ignores. The rich in America are just as likely to be firing Americans and sending jobs overseas or investing their money in other ways that have nothing to do with creating jobs and opportunities in this country. The argument that they shouldn’t be taxed on their investment income because of their amazing contribution to our economy is an old one that ignores the modern economical environment.
January 17th, 2008 at 8:14 pm
Rob, why don’t you explain what a “fair tax break…” looks like?
I support every taxpayer getting a tax-cut. I don’t know the means to bring it about and apparently neither do you. Nevertheless, you want the “rich” to pay more…it’s their lot in life.
How does over-taxing and re-taxing the “RICH” help the economy? Perhaps, that’s why many corporations go abroad to get away from this insanity and increase their profits.
Maybe we should begin by defining “WHO is rich” and “WHO is poor,” “What is fair” and “what is not.”
I don’t want MY investments taxed and the same should go for the other guy, EVEN if he has more than me. That is equitable.
BTW, your last paragraph makes for ‘nice’ prose but empty rhetoric.
January 18th, 2008 at 6:02 am
Elisabetta Says: “I don’t want MY investments taxed ”
Why? Why is it that you think hard work should be taxed but not your investments? Wow! Have you ever actually had a job?
January 18th, 2008 at 9:56 am
David, every time you open your mouth you get it wrong. One more attempt and then I am done responding to your nonsense or outright lies.
When have I EVER supported taxing hard work?
To sum it up, I have stated before that I hate that so much of my money goes to the government. I am not on ANY government programs, don’t live on someone’s inheritance, don’t agree to support those that make zero effort to get off their butts and do something with their lives…Therefore that infers I have to make a living in order to live! Is it abundantly clear and simple enough for you, now?
As for investments, one doesn’t have to be “rich” to put money where one sees fit.
January 18th, 2008 at 12:08 pm
Elisabetta, your little rant has nothing to do with my question (as usual). Why should work be taxed but not your investments? Or is your point that nothing should be taxed and we should just borrow from China and the Saudis?
January 18th, 2008 at 1:00 pm
Actually, your stupid question from where you derived your false conclusions ( that I want hard work taxed, THUS, I never held a job) had nothing to do with what I wrote.
Let’s recap. First, you bellyache that I want to tax hard (a lie); THEN you act shocked that I don’t and concot more balderdash! Make up your mind. Goodbye!
January 18th, 2008 at 1:03 pm
Should read *First, you bellyache that I want to tax hard work (a lie); *
January 21st, 2008 at 8:19 am
Let me try again. This time, you try not to twist my words. You clearly said that you don’t want your investments taxed, so either you want no taxes at all or you think that work should be taxed but not investments. Can you follow that? Which is it? BTW, I never “bellyached” about anything, I simply made a point. The fact that you didn’t bother to think through your statement before opening your mouth isn’t my fault. Now, try again, what income should be taxed since you don’t want to pay any on your investments?
January 21st, 2008 at 9:42 am
To set the record straight.
If anyone here is in the habit of twisting someone else’s words - better yet, lies - his name is David.
(sic)
“Why? Why is it that you think hard work should be taxed but not your investments? Wow! Have you ever actually had a job?”
You concoct a lie (taxing hard work), correlate it with something I did say (not taxing investments) to create your argument, which you “define” as making a point. Wrong.
It’s clear where I stand on both and what I support as an alternative to income tax.
When you decide to drop the red herrings and stick to the facts, not your fantasies, perhaps then, we may have a discussion. Until then, go bother someone else.
January 21st, 2008 at 3:47 pm
So you don’t think either should be taxed and a 30% sales tax would be good? That would be just dandy for a consumer society.